All Financial Education

Creating a Quality Credit Score

January 7, 2015

Credit Report on iPad Photo

Credit scores can be a scary three digit number until you understand where they come from, what they mean, and how you can maintain a good one. In this article we’ll walk you through the ins and outs of credit scores and how you can improve yours.

Your credit score plays an important part in your financial well-being. Your ability to get financing and the interest you’ll pay on a credit card, auto loan, mortgage and other loans is directly affected by this number. Scores will typically range from 300 to 850, the higher the number, the better the score. A good score can get you lower interest rates, might be a deciding factor between you and another candidate when applying for a job or could even get you into that apartment that you are excited to rent.

So how do you get and maintain good credit? According to FICO, the business analytic software company who calculates credit scores, although the exact formulas for determining scores are secret, there are five main factors that go into this calculation:

  • Payment History (35%): Shows whether you’ve paid past credit accounts on time. This is one of the most important factors in a score.
  • Amounts Owed (30%): Owing money doesn’t necessarily mean you are a high-risk borrower. However, when a high percentage of a person’s available credit is in use it can mean that a person is overextended and is more likely to miss or make late payments.
  • Length of Credit History (15%): Shows how long you’ve been using credit. A longer credit history generally will raise your score. However, depending on how the rest of your report looks like, someone with a minimal history can still have a high score.
  • Types of Credit Used (10%): This score looks at your mix of credit and evaluates if you have the right types of debt and diverse debt holdings.
  • New Credit (10%): Research shows that opening several credit cards in a short period of time increases risk for a lender. This factor details how many times you’ve applied for credit in the past 6 months to a year.

If your credit score isn’t where you want it to be, here are a few tips to help you get started on increasing your number:

  • Check Your Credit Report: Request a free copy of your credit report ( and review it for errors. Specifically check to make sure there are no late payments incorrectly listed and that the amount you owe for open accounts are correct. If you find an error, dispute them with the credit reporting company and the information provider (the person or organization that provides information about you to the credit reporting company). For more information on disputes, visit
  • Pay Your Bills On Time: Making a late payment or missing a payment entirely because you lost or forgot about a bill can be detrimental to your credit. Keep track of all your payments in a calendar, or set up some sort of a reminder. Consider enrolling in automatic payments through Idaho Central’s Bill Pay system.
  • Contact Your Creditors if You Are Having Trouble: Immediately contact creditors to let them know you are having financial trouble and may miss or not be able to make a full payment. Creditors are often willing to work with you if you reach out to them and addressing problems quickly will help with the negative effects of late payments and outstanding balances.
  • Keep Amount of Debt Owed Low: The total debt owed is a major factor in the formula to calculate your score. Try to limit your credit card spending to necessities pay down debt as much as you can. Even if it is just an extra $5 above your minimum payment these extra dollars add up and can end up saving you a lot of money in the long run while helping improve your credit score.

For more information on your credit score and ways you can improve it, please visit one of our branch locations or give us a call (1-800-456-5067) to speak with one of our team members.